<p>Almost all reputable scholarships pay directly to the school. Not reporting it is not an option. I believe that outside merit scholarships and winning essay type contest scholarships CAN be used to offset your/parent share because they were not accessible to the school to assign and you would not have them except for your own efforsts. For example, as the dependent of disabled military, I have a benefit at a California public university that is used in the university’s calculation to directly meet the parent cost.</p>